Study Resources (Accounting)

24) A company's defined benefit pension plan incurs current service cost of $8,000,000. Expected income on the pension plan's assets amounted to $7,800,000, while actual income was $9,900,000. The interest on the pension obligation was $9,000,000, which matched the actuarial estimates. The pension plan has no past service costs, and.

5) On January 1, 2011, Troy Company entered a lease to rent office space. The lease requires Troy to pay $190,000 per year, at the beginning of each year, for 10 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 30 years, and its current fair.

16) For each of the following differences between the amount of taxable income and income recorded for financial reporting purposes, compute the effect of each difference on deferred taxes balances on the balance sheet. Treat each item independently of the others. Assume a tax rate of 25%.
17) For each of.

19) The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax accounting income is $650,000 for the year ended December 31. The company's income tax rate is 45%. Additional information relevant to income taxes includes the following.
a. Capital cost allowance of $270,000 exceeded.

35) A company facing a 45% tax rate has calculated its taxable income for the year to be $2,100,000. It made installment payments during the year totalling $995,000; this amount has been recorded in an asset account as "income tax installments"
Requirement:
Prepare the journal entry to record the adjusting entry for.

9) Which statement is correct about "agency cost of leasing"?
A) The lease payments are lowered to compensate for the agency cost of leasing.
B) Shorter lease terms decrease the agency cost of leasing.
C) Agency cost of leasing is an illustration of the "moral hazard" problem.
D) Agency cost of leasing is an.

16.2 Learning Objective 2
1) Which of the following is an example of a "permanent difference"?
A) Warranty provisions.
B) Dividends on corporations.
C) Depreciation on capital assets.
D) Completed contract method.
2) Which of the following is not an example of a "temporary difference"?
A) Membership fees that are not deductible.
B) Advances received on rent revenue.
C).

7) A pension plan promises to pay $70,000 at the end of each year for 10 years of the retirement period.
Requirements:
Compute the funds required to fund this pension plan at the start of the retirement period assuming:
a. discount rate of 12%; or
b. discount rate of 9%.
8) Orion Steel provides a.

11) In the first year of operations, a company reports taxable income of $225,000 and paid a tax rate of 28%. It is now the end of the second year, and the company has a loss of $375,000 for tax purposes. The company's management believes it is probable the company.

8) Bram Masons' balance sheet shows a defined benefit liability of $740,000. Records show that there are $89,000 of past service costs and $610,000 of actuarial gains that remain unamortized.
Requirement:
Using the pension reconciliation required in Bram's note disclosures, determine the pension plan's surplus or deficit.
9) Feldman has a defined benefit.

11) A company reported $430,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $29,000 over the year.
Requirement:
How much cash was paid to the pension trustee during the period?
12) Gander Products has a defined contribution pension plan for its employees. The plan.

18.1 Learning Objective 1
1) Which statement is not correct?
A) A finance lease transfers risks and rewards from the lessor to the lessee.
B) The "lessor" is the owner of the asset in a lease arrangement.
C) A lease is a written contract that allows another party to use an owner's property.
D) The.

15) At the beginning of the current year, a pension has assets of $74,500,000 and accrued benefit obligation of $77,500,000. At this time, unamortized actuarial gains were $750,000 on plan assets and $800,000 on plan obligations. The expected average remaining service lives (EARSL) of current employees is 25 years.
Requirement:
Compute the.

17.1 Learning Objective 1
1) Which of the following best describes a "defined benefit plan"?
A) High returns in the pension plan result in higher benefit payments to the employees in the future.
B) A pension plan that specifies how much funds the employee needs to contribute.
C) A plan that requires the employer.

13) Katherina is currently 30 years old and plans to retire later in life. She would like to have an income of $35,000 per year during her retirement, which she anticipates will last for another 25 years. Assume that she receives the retirement income at the end of each of.

10) A pension plan promises to pay $75,000 at the end of each year of the retirement period.
Requirements:
Compute the funds required to fund this pension plan at the start of the retirement period assuming:
a. discount rate of 9% and a retirement period of 30 years; or
b. discount rate of 9%.

19) Explain how a change in the following assumption will impact the pension surplus.
20) Explain how a change in the following assumption will impact the defined benefit asset on the balance sheet.
21) Explain how a change in the following assumption will impact the pension expense.
.

17) Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31, 2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317.
The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31, 2019,.

27) Current service cost for a defined benefit pension plan amounted to $7,800,000. This pension plan's assets generated $6,500,000 of income, which exceeded expectations by $550,000. Pension obligations incurred interest cost of $5,500,000, which were above expectations by $280,000. Amortizations during the year included $400,000 for past service cost and.

18) A company has a defined benefit pension liability of $1,050,000 at the beginning of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.
Requirement:
Determine the value of the defined benefit pension liability at year-end.
19) A company has a defined benefit.

17.5 Learning Objective 5
1) What is an actuarial loss?
A) An unfavourable difference between actual and expected amounts for pension assets.
B) A favourable difference between actual and expected amounts for pension assets.
C) An unfavourable difference between actual and expected amounts for pension contributions.
D) A favourable difference between actual and expected amounts.

16.4 Learning Objective 4
1) Which statement is correct?
A) Income tax system treats income and losses symmetrically.
B) Income tax system treats income and losses asymmetrically.
C) When a company has a loss, a refund is received equal to the loss multiplied by the tax rate.
D) A loss carryforward has immediate cash flow.

17.2 Learning Objective 2
1) Which statement about "defined contribution plans" is not correct?
A) Pension expense equals the contributions made based on the plan formula.
B) Pension expense equals the present value of the future benefits to be paid to the retiree.
C) Pension cost may be capitalized to the cost of inventory.
D).

30) Current service cost for a defined benefit pension plan amounted to $7,800,000. This pension plan's assets generated $6,500,000 of income, which exceeded expectations by $570,000. Pension obligations incurred interest cost of $5,000,000, which were above expectations by $280,000. Amortizations during the year included $400,000 for past service cost and.

10) Indicate whether the item will result in a deductible temporary difference, taxable temporary difference or neither.
Item
Deductible temporary difference
Taxable temporary difference
Neither
Rent revenue collected in advance that is taxable in the year received
CCA that exceeds depreciation expense for property, plant, and equipment
Membership dues that are not deductible
Percentage of completion income that.

11) A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000. The current year tax rate is 30%.
Requirement:
Provide the journal entry to reflect the tax rate change.
12) A company has a deferred tax liability of $120,000.

7) On January 1, 2011, Pelvisee Company entered a lease to rent office space. The lease requires Pelvisee to pay $390,000 per year, at the beginning of each year, for 15 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 30 years, and its current fair.

12) What are actuarial losses or gains in a defined benefit plan?
A) Plan amendments that retrospectively improve pension plan benefits.
B) Expected income earned on the pension plan assets.
C) Difference arising between the actual and the expected value of plan assets.
D) Differences arising between the actual and expected values of the.

11) Masons' balance sheet shows a defined benefit asset of $740,000. Records show that there are $89,000 of past service costs and $610,000 of actuarial losses that remain unamortized.
Requirement:
Using the pension reconciliation required in the company's note disclosures, determine the pension plan's surplus or deficit.
12) Feldman has a defined benefit.

13) During its first year of operations, Karol Corp. reported the following information:
•Income before income taxes for the year was $550,000 and the tax rate was 35%.
•Depreciation expense was $100,000 and CCA was $50,000.
•Warranty expense was reported at $20,000, while actual cash paid out was $10,000.
•$25,000 of expenses included in.

8) A company has a deferred tax liability of $112,500 at the beginning of the fiscal year relating to a taxable temporary difference of $450,000. The tax rate for the year increased from 25% to 35%.
Requirement:
Provide the journal entry to reflect the tax rate change.
9) A company has a deferred.

17.4 Learning Objective 4
1) Which statement is correct?
A) The defined benefit liability or asset must be separately identified on the income statement.
B) The components of pension expense must be disclosed in the notes to the statements.
C) The defined benefit liability or asset must be separately identified on the balance sheet.
D).

4) Wags Inc Company sponsors a defined contribution pension plan for its employees. The plan specifies that the company will match the amount each employee contributes to the plan. Employees are eligible to contribute up to 4% of their salary to the pension plan. During 2012, employees covered by the.

6) Which statement about "defined contribution plans" is correct?
A) Pension expense equals the contributions made based on the plan formula.
B) Pension expense equals the present value of the future benefits to be paid to the retiree.
C) Pension cost cannot be capitalized to the cost of inventory.
D) Pension cost may not.

6) The following are the characteristics of a lease:
Fair value of leased asset
150,000
Lease payments
25,500
Lease term
7
Payment frequency
Annual
Payment timing
End of year
Guaranteed residual value
None
Interest rate implicit in lease
8%
Requirement:
Determine the present value of minimum lease payments (MLP) and the appropriate classification of this lease for the lessee.
7) The following are the characteristics of a.

17.3 Learning Objective 3
1) Which statement best explains the meaning of "current service cost"?
A) The present value of pension benefits that employees have earned.
B) The increase in the present value of obligations from services rendered in the current period.
C) The amount of funds deposited with the pension trust in the.

21) A company has a defined benefit pension liability of $3,750,000 at the end of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.
Requirement:
Determine the value of the defined benefit pension liability at the beginning of the year.
22) A company.

13) A company has income before tax of $200,000. The company also has a temporary difference of $80,000 relating to capital cost allowance (CCA) in excess of depreciation expense recorded for the year. There are no other permanent or temporary differences. The income tax rate is 40%.
Requirement:
Compute the amount of.

21) The following information relates to the accounting income for Ontario Uranium Enterprises (QUE) for the current year ended December 31.
Income before taxes$850,000
Membership fees—non deductible for tax20,000
Depreciation and depletion expense380,000
CCA470,000
Loss on disposal of equipment (see additional info below)75,000
Tax rate30%
During the year, the company sold one of its machines with carrying.

9) On January 1, 2011, Granite Company entered a lease to rent office space. The lease requires $350,000 per year, at the beginning of each year, for 20 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 30 years, and its current fair value is estimated.

6) In pension accounting, how are past service costs accounted for under ASPE?
A) Recognized in the balance sheet as a liability for the full amount.
B) Recognized in the income statement as an expense for the full amount.
C) Not recognized, but disclosed in a note.
D) Amortized over a specified period and.

18) Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31, 2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317.
The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31, 2019,.

15) A pension plan promises to pay $75,000 at the end of each year for 25 years of the retirement period.
Requirements:
Compute the funds required to fund this pension plan at the start of the retirement period assuming:
a. discount rate of 5%; or
b. discount rate of 4%.
16) Othello Steel provides a.

8) In the first two years of operations, a company reports taxable income of $115,000 and $165,000, respectively. In the first two years, the tax rates were 38% and 32% respectively. It is now the end of the third year, and the company has a loss of$160,000 for tax purposes..